Advance Auto Parts, Inc. (NYSE: AAP), a leading automotive
aftermarket parts provider in North America, today provided an
update regarding the impact from the novel coronavirus
(COVID-19).
Tom Greco, president and chief executive
officer of Advance Auto Parts, stated, “Nothing is more important
than the health and safety of our Team Members and customers. We
are proud to continue serving our customers throughout North
America as an essential business, playing a critical role in
ensuring people have reliable transportation in order to provide
access to food, supplies and medical services. This includes
healthcare workers, first responders and the many people who are
keeping our grocery and drug stores stocked. We are extremely
thankful to all of those who are helping the world get through this
global pandemic. To enable America to get through this
unprecedented crisis, we are taking additional measures to help
ensure the safety of our Team Members and customers across our
entire store and DC network.
“These critical measures include the
implementation of emergency pay guidelines that provide additional
paid sick time of 80 hours for full-time and 44 hours for part-time
Team Members impacted by COVID-19. To further assist individuals
who may need additional financial support, we have expanded our
Team Member Assistance Fund where Team Members can receive a grant
of up to $300 to help with basic living expenses, including child
care costs. In addition, following guidance from the CDC, we have
further increased cleaning and sanitation practices across Advance,
encourage frequent handwashing, are providing masks for our Team
Members and are practicing social distancing both in our stores and
DCs.
“We have also responded to changing customer
needs and preferences by rapidly introducing new ways to serve our
customers in the current environment. For example, to further
strengthen our omnichannel solutions, we recently launched ‘Advance
Same Day’ Curbside Pick Up, ‘Advance Same Day’ Home Delivery and
our mobile app. These highly relevant and timely initiatives
further bolster our ecommerce platform, offering new ordering and
contactless fulfillment options for DIY customers. For professional
customers, we have refined our standard operating procedures to
supply parts through contactless delivery methods.
“As we have quickly adjusted how we conduct
business in this changing environment, we have also taken swift
action to reduce costs to preserve the financial strength of
Advance. The current environment includes shelter in place orders
which have driven a temporary reduction in miles driven,
particularly in hard hit geographies, and therefore have impacted
both DIY retail traffic and professional customer car counts. With
this in mind, we have reduced store hours of operation and
strategically closed stores temporarily where we can service demand
from an alternative location. We have also reduced costs in our
stores and supply chain to reflect volume declines and deferred
certain marketing expenses. Finally, in an effort to preserve cash,
we have decreased our remaining capital spend for 2020 by over 50%,
which is also driving a meaningful reduction in professional fees
and contract labor spend associated with certain projects. Our
decisions around capital spend reduction have been tactical in
order to maintain the spend on projects we believe have the best
return on investment.”
Mr. Greco concluded, “I could not be prouder
of the dedication by our Team Members and Independent Partners and
the work they are doing to keep America moving forward. We are all
pulling together during this pandemic and I am confident our team
will come out of this stronger together. On behalf of the entire
Advance family, we are committed to helping our customers across
North America get through this difficult period and look forward to
a successful recovery across the globe.”
Given uncertainties related to the full impact of the COVID-19
pandemic, including those related to a potential slowdown in
economic activity, weaker demand, fewer miles driven, supply
disruptions or constraints, and the spread of the pandemic and
related governmental actions, the company is withdrawing the full
year financial guidance it provided on February 18, 2020.
Additionally, the company has suspended its share repurchase
activity to further preserve cash.
The company’s first fiscal quarter comprises the sixteen weeks
ending April 18, 2020. Quarter to date comparable store sales for
the twelve weeks ended March 21, 2020 were down 3.2% compared to
prior year, which was negatively impacted from COVID-19 by
approximately 180 basis points during the last two weeks of that
time frame. With shelter in place orders in effect across most of
North America, the company’s comparable store sales were down
approximately 28% during both weeks-ended March 28, 20201 and April
4, 20201 compared to the same weeks in the prior year. COVID-19 has
had a greater impact on the company’s professional business than
DIY omnichannel and has been particularly acute in major urban
markets such as New York, Detroit and the San Francisco Bay
Area.
In March 2020, the company drew down $500 million from its
previously undrawn $1 billion revolving credit facility, which may
be increased to $1.25 billion based on customary requirements.
Including the March borrowing, as of March 21, 2020, the company’s
cash on hand was approximately $790 million and, as of April 4,
2020, the company’s cash on hand was approximately $744 million,
which includes the impact of the dividend paid on April 3, 2020,
changes in working capital and capital expenditures. Inclusive of
cash on hand, the remaining capacity under the company’s revolving
credit facility provides the company with total liquidity of $1.24
billion.
For more information, please visit ir.advanceautoparts.com.
1 The information is based on preliminary internal sales data
available as of the date of this release and, given market
uncertainties, may not be representative of future periods or the
company’s results for a fiscal quarter.
About Advance Auto Parts
Advance Auto Parts, Inc. is a leading automotive aftermarket
parts provider that serves both professional installer and
do-it-yourself customers. As of December 28, 2019, Advance operated
4,877 stores and 160 Worldpac branches in the United States,
Canada, Puerto Rico and the U.S. Virgin Islands. The Company also
serves 1,253 independently owned Carquest branded stores across
these locations in addition to Mexico, the Bahamas, Turks and
Caicos and British Virgin Islands. Additional information about
Advance, including employment opportunities, customer services, and
online shopping for parts, accessories and other offerings can be
found at ir.AdvanceAutoParts.com.
Forward-Looking Statements
Certain statements in this report are “forward-looking
statements” within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements, other than statements of
historical facts, may be forward-looking statements.
Forward-looking statements address future events or developments,
and typically use words such as “believe,” “anticipate,” “expect,”
“intend,” “plan,” “forecast,” “guidance,” “outlook” or “estimate”
or similar expressions. These forward-looking statements include,
but are not limited to, key assumptions for future financial
performance including net sales, store growth, comparable store
sales, gross profit rate, SG&A, adjusted operating income,
income tax rate, transformation costs, adjusted operating income
rate targets, capital expenditures, inventory levels and free cash
flow; statements regarding expected growth and future performance
of the Company; statements regarding enhancements to stockholder
value, strategic plans or initiatives, growth or profitability,
productivity targets; statements regarding the impact of the
current global pandemic; and all other statements that are not
statements of historical facts. These statements are based upon
assessments and assumptions of management in light of historical
results and trends, current conditions and potential future
developments that often involve judgment, estimates, assumptions
and projections. Forward-looking statements reflect current views
about the Company's plans, strategies and prospects, which are
based on information currently available as of the date of this
release. Forward-looking statements are subject to risks and
uncertainties, many of which are outside its control, which could
cause actual results to differ materially from these statements,
including, but not limited to, the spread of COVID-19 and a variety
of potential implications related to COVID-19, including, but not
limited to, regulatory measures or voluntary actions that may be
put in place, economic and competitive impacts, business
disruptions, customer demand, availability and cost of labor, costs
associated with and execution of strategic initiatives, changes in
laws or regulations and those risks and uncertainties discussed in
"Item 1a. Risk Factors" in the Company's most recent Annual Report
on Form 10-K filed with the Securities and Exchange Commission.
Except as required by law, the Company undertakes no obligation to
update any forward-looking statements to reflect events or
circumstances after the date of such statements. Therefore, you
should not place undue reliance on those statements.
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version on businesswire.com: https://www.businesswire.com/news/home/20200409005857/en/
Investor Relations Contact: Elisabeth Eisleben T: (919)
227-5466 E: invrelations@advanceautoparts.com Media Contact:
Darryl Carr T: (984) 389-7207
E:AAPCommunications@advance-auto.com
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